Humankind is heading towards extinction. This fact has attracted the attention of eccentric billionaire Elon Musk who is sounding the alarm.
“Population collapse due to low birth rates is a much bigger risk to civilization than global warming,” Musk tweeted earlier this year.
But it’s not just Elon Musk who foresees our collective demise. Numerous sociologists and researchers are predicting that, absent substantial changes in family formation and the fertility rate, our global population will begin to decline this century.
And then it will never stop.
Darrell Bricker, a leading international social researcher, and John Ibbitson, an award-winning journalist, published the book Empty Planet: The Shock of Global Population Decline in 2019.
“The great defining event of the twenty-first century … will occur in three decades, give or take, when the global population starts to decline. Once that decline begins, it will never end,” they write. “We do not face the challenge of a population bomb but of a population bust – a relentless, generation-after-generation culling of the human herd.”
Clearly, something has gone wrong. The fertility rate in the United States, and in nearly all of the Western world, is below the replacement rate. Many in the younger generations – Millennials and Gen Z – have lost the will to continue or see no future for the next generation. They are no longer producing enough children to replace themselves.
Unless something changes, the decline of our species is just a few short decades away.
Certainly, there’s no singular cause behind this fact. The decline of religion, the delaying and redefinition of marriage, and the rise of couples who have no desire to create children are obvious factors.
But one of the more overlooked contributing causes may be the rising cost of purchasing a home. If young people of reproductive age can’t afford a home to house a growing family, they will stop growing that family.
The Rising Cost of Housing
According to data provided by the U.S. Federal Reserve, following the burst of the housing bubble in the mid-2000s, home prices began to increase substantially in 2012 when compared to the median household income. This increase has continued ever since.
During the housing bubble, the highest the home price to median income ratio reached was 7.03 on November 30, 2005. This means the average price of a home was 7.03 times more than the median income.
But as of May 31, 2022, the average price of a house in the U.S. cost 7.79 times the yearly household income. This was the largest number ever recorded in the last eight decades, since such data was first collected beginning in 1946 – including the peak of the housing bubble.
Data website Longtermtrends.net shares a chart highlighting the home price to median household income ratio from 1946 – 2022.
Between 1960 and 2000, the home price to median income ratio varied between roughly four and five. The two spikes in the ratio to seven or eight (during the housing bubble, and now, respectively) are anomalies in U.S. history.
This data demonstrates the price of housing in the 21st century is substantially greater than it ever was in the 20th century. This is not a sustainable trendline for families.
While the rising price of housing benefits Baby Boomers and Generation Xers, who are more likely to own homes, it harms Millennials and young families who have no equity and are trying to buy their first homes.
In addition, a number of studies have confirmed the trend of rising real estate prices over the past several decades.
The online brokerage Clever Real Estate recently reported that while the dramatic rise in home prices worsened following the COVID pandemic, 2020 was not the start of the incongruence. Rather, the disparity between home prices and median household income has been growing for 50 years.
“After accounting for inflation, home prices have jumped 118% since 1965, while income has only increased by 15%,” Clever Real Estate found. “To afford a home in 2021, Americans need an average income of $144,192 — far more than the median household income of $69,178.”
According to another estimate, housing is currently far more expensive for Millennials than it was for Baby Boomers several decades ago.
“If home prices grew at the same rate as inflation since 1970, the median home price today would be just $177,788 – rather than $408,100,” Anytime Estimate, a data research entity, reports. “Compared to the average baby boomer entering their 30s in 1985, the average millennial entering their 30s in 2019 faced a 31% higher home-price-to-income ratio.”
Clearly, Millennials today face a much more difficult time entering the housing market than their parents did in the 20th century.
Wither the Starter Home?
Another phenomenon presenting a negative impact on younger people is the disappearance of the “starter home.”
According to a recent article in The New York Times, “The nation has a deepening shortage of housing. But, more specifically, there isn’t enough of this housing: small, no-frill homes that would give a family new to the country or a young couple with student debt a foothold to build equity.”
Or start a family.
“Nationwide, the small, detached house has all but vanished from new construction. Only about 8 percent of new single-family homes today are 1,400 square feet or less. In the 1940s, according to CoreLogic, nearly 70 percent of new houses were that small,” The Times writes.
The type of less expensive, smaller houses young couples who desire to have children would be able to afford are all but vanishing.
Today, starter homes are disappearing. The homes being built and resold are far more expensive. The cost of housing has far exceeded inflation and wage increases. And the losers in that equation are younger people and families.
Stereotypically, older generations like regaling younger people with the difficulties of life “back in their day.” But what if it’s really the younger generations who have it hardest? What if Millennials should start saying, “Now in our day.”
Considering these statistics, should we really be surprised younger generations are struggling to make it on their own, much less marry and have children?
Millennials Delaying Family Formation
The above information isn’t esoteric. It’s having a real-world effect on young people and family formation.
A recent survey from LendingTree found that “nearly a third (32%) of millennials and Gen Zers moved back home with their parents during the pandemic … Two-thirds of young adults who moved back home remain with their parents [and are] focused on paying down debt and saving for a home.”
Young adults feel forced to pick between saving up for a home and moving on with their lives.
An important 2013 study was the first to look at the role of housing in young adults’ decisions regarding family size. It was conducted by the LIS Cross-National Data Center, a non-profit economic data organization and found that the cost of housing “influences fertility by shaping transition decisions into parenthood.”
The study found that when it comes to decisions regarding family size, “housing costs are directly related to fertility. Children and housing are competing goods, and thus there is a tradeoff between the two.”
Additionally, “Housing costs are indirectly related to fertility through transition decisions of young adults. If housing is expensive enough to delay key transition decisions, fertility is also delayed, and sometimes lowered.”
Another 2009 study found that higher rent prices negatively impact fertility rates. And a third study from the National Bureau of Economic Research published in 2012 found “housing prices have a significant impact on a family’s decision to have children…”
Where We Go from Here
There is no single, easy solution to help younger people get married, buy homes, and have children. But our society, including government authorities, must consider what practices and policies could be implemented to foster family formation.
It can be all too easy to turn to the government to solve our problems. But as former President Ronald Reagan said during his 1981 inaugural address, “Government is not the solution to our problem, government is the problem.”
Following the bursting of the housing bubble in the mid-2000s, the U.S. Federal Reserve lowered the federal funds rate to near-zero, kept it there for nearly a decade, and purchased trillions of dollars in mortgage-backed securities. These actions had as their purpose, and consequence, the artificial boosting of asset prices, including stocks and real estate.
The federal government and unaccountable central bankers may not be able to solve our housing-affordability crisis, but maybe they can reverse their decades long easy money policies and stop contributing to it.
In addition, as the Brookings Institution suggests, local zoning reform could open up neighborhoods to more townhomes and duplexes, helping to increase the supply of more affordable housing – especially the kind of “starter homes” that the U.S. is in desperate need of.
Other policies, like expanding tax credits for first time home buyers, should also be considered.
Whatever the approach, helping younger generations purchase affordable homes, and start families, should be one of the main priorities of the federal, state and local governments.
Because without an increase in family formation and fertility rates, we face the dire prospect of an empty planet.
Zachary Mettler is a staff writer for Focus on the Family’s Daily Citizen. Mettler earned his bachelor’s degree from William Jessup University and is an alumnus of the Young Leaders Program at the Heritage Foundation.
The views expressed in this piece are those of the author and do not necessarily represent those of The Daily Wire.